GOI/Bush Supports Indonesia Bio-fuel Initiatives

The US is "very supportive" of biofuel initiatives, President George Bush said on Monday (20/11/06) during a visit to Indonesia, which is trying to develop that sector as it copes with growing energy demand.

Bush and Indonesian President Susilo Bambang Yudhoyono said the issue was a major topic in their discussions, and that the US had agreed to help Indonesia with technology in the area.

"I am very supportive of bio-fuel initiatives, starting in our own country. It's important for us to develop alternative ways to power our vehicles if we want to become less dependent on oil," Bush was quoted as saying by Reuters in Bogor.

"The president and I spent a fair amount of time talking about the ability to develop bio-fuels, particularly in Indonesia's case from sugar cane as well as palm oil, and the technologies are available to convert sugar into ethanol," Bush said.

Indonesia has said the bulk of its bio-fuel production will come from palm oil-based bio-diesel produced by the private sector.Indonesia and Malaysia, the world's two leading palm producers, plan to set aside up to 40% of their output for bio-diesel, with Jakarta estimating 600,000 tons of crude palm oil will be used by the bio-diesel industry next year.

Indonesia's calendar year 2007 palm oil production is forecast to rise to 17.6 million tons from an estimated 15.90 million in 2006, overtaking Malaysia as the world's largest producer, industry sources said.

As part of the government's plans, two state-owned companies, PT Rajawali Nusantara Indonesia and PT Perkebunan Nusantara III plan to build bio-fuel plants using palm oil and sugar cane.

Earlier this year, the government allowed retailers to blend 10% of bio-fuels into fuel products. State oil and gas company PT Pertamina is retailing bio-diesel, made up of 5% crude palm oil blended with 95% diesel oil.

Meanwhile, Pertamina vice president Iin Takhyan Arifin said the company wants the government to subsidize bio-fuel or it will end up suffering losses from distributing the product.

“It is up to the government and the parliament to decide but we want bio-fuel to be subsidized too or we will suffer losses. We want it to be treated like oil fuel,” Arifin was quoted as saying by XFN-Asia.

He also said that Pertamina is not interested in investing in plantations that produce material for bio-fuels though it may want to be involved in processing the fuel in the future.